Climate Change 2001: Mitigation

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Table TS. 2: Technological options, barriers, opportunities, and impacts on production in various sectors
Technological options
Barriers and opportunities
Implications of mitigation
policies on sectors
Buildings, households and services: Hundreds of technologies and measures exist that can improve the energy efficiency of appliances and equipment as well as building structures in all regions of the world. It is estimated that CO2 emissions from residential buildings in 2010 can be reduced by 325MtC in developed countries and the EIT region at costs ranging from -US$ 250 to -US$ 150/ tC and by 125MtC in developing countries at costs of -US$ 250 to US$ 50/ tC. Similarly, CO2 emissions from commercial buildings in 2010 can be reduced by 185MtC in industrialized countries and the EIT region at costs ranging from -US$ 400 to -US$ 250/ tC and by 80MtC in developing countries at costs ranging from -US$ 400 to US$ 0/ tC. These savings represent almost 30% of buildings, CO2 emissions in 2010 and 2020 compared to a central scenario such as the SRES B2 Marker scenario.

Barriers: In developed countries a market structure not conducive to efficiency improvements, misplaced incentives, and lack of information; and in developing countries lack of financing and skills, lack of information, traditional customs, and administered pricing.

Opportunities: Developing better marketing approaches and skills, information- based marketing, voluntary programmes and standards have been shown to overcome barriers in developed countries. Affordable credit skills, capacity building, information base and consumer awareness, standards, incentives for capacity building, and deregulation of the energy industry are ways to address the aforementioned barriers in the developing world.

Service industries: Many will gain output and employment depending on how mitigation policies are implemented, however in general the increases are expected to be small and diffused.

Households and the informal sector: The impact of mitigation on households comes directly through changes in the technology and price of household's use of energy and indirectly through macroeconomic effects on income and employment. An important ancillary benefit is the improvement in indoor and outdoor air quality, particularly in developing countries and cities all over the world.
Transportation: Transportation technology for light- duty vehicles has advanced more rapidly than anticipated in the SAR, as a consequence of international R& D efforts. Hybrid- electric vehicles have already appeared in the market and introduction of fuel cell vehicles by 2003 has been announced by most major manufacturers. The GHG mitigation impacts of technological efficiency improvements will be diminished to some extent by the rebound effect, unless counteracted by policies that effectively increase the price of fuel or travel. In countries with high fuel prices, such as Europe, the rebound effect may be as large as 40%; in countries with low fuel prices, such as the USA, the rebound appears to be no larger than 20%. Taking into account rebound effects, technological measures can reduce GHG emissions by 5%- 15% by 2010 and 15%- 35% by 2020, in comparison to a baseline of continued growth. Barriers: Risk to manufacturers of transportation equipment is an important barrier to more rapid adoption of energy efficient technologies in transport. Achieving significant energy efficiency improvements generally requires a "clean sheet" redesign of vehicles, along with multibillion dollar investments in new production facilities. On the other hand, the value of greater efficiency to customers is the difference between the present value of fuel savings and increased purchase price, which net can often be a small quantity. Although markets for transport vehicles are dominated by a very small number of companies in the technical sense, they are nonetheless highly competitive in the sense that strategic errors can be very costly. Finally, many of the benefits of increased energy efficiency accrue in the form of social rather than private benefits. For all these reasons, the risk to manufacturers of sweeping technological change to improve energy efficiency is generally perceived to outweigh the direct market benefits. Enormous public and private investments in transportation infrastructure and a built environment adapted to motor vehicle travel pose significant barriers to changing the modal structure of transportation in many countries.

Opportunities: Information technologies are creating new opportunities for pricing some of the external costs of transportation, from congestion to environmental pollution. Implementation of more efficient pricing can provide greater incentives for energy efficiency in both equipment and modal structure. The factors that hinder the adoption of fuel- efficient technologies in transport vehicle markets create conditions under which energy efficiency regulations, voluntary or mandatory, can be effective. Well- formulated regulations eliminate much of the risk of making sweeping technological changes, because all competitors face the same regulations. Study after study has demonstrated the existence of technologies capable of reducing vehicle carbon intensities by up to 50% or in the longer run 100%, approximately cost- effectively. Finally, intensive R&D efforts for light- duty road vehicles have achieved dramatic improvements in hybrid power- train and fuel cell technologies. Similar efforts could be directed at road freight, air, rail, and marine transport technologies, with potentially dramatic pay-offs.

Transportation: Growth in transportation demand is projected to remain, influenced by GHG mitigation policies only in a limited way. Only limited opportunities for replacing fossil carbon based fuels exist in the short to medium term. The main effect of mitigation policies will be to improve energy efficiency in all modes of transportation.
Industry: Energy efficiency improvement is the main emission reduction option in industry. Especially in industrialized countries much has been done already to improve energy efficiency, but options for further reductions remain. 300 - 500MtC/yr and 700 -1,100MtC/yr can be reduced by 2010 and 2020, respectively, as compared to a scenario like SRES B2. The larger part of these options has net negative costs. Non-CO2 emissions in industry are generally relatively small and can be reduced by over 85%, most at moderate or sometimes even negative costs. Barriers: lack of full- cost pricing, relatively low contribution of energy to production costs, lack of information on part of the consumer and producer, limited availability of capital and skilled personnel are the key barriers to the penetration of mitigation technology in the industrial sector in all, but most importantly in developing countries.

Opportunities: legislation to address local environmental concerns; voluntary agreements, especially if complemented by government efforts; and direct subsidies and tax credits are approaches that have been successful in overcoming the above barriers. Legislation, including standards, and better marketing are particularly suitable approaches for light industries.

Industry: Mitigation is expected to lead to structural change in manufacturing in Annex I countries (partly caused by changing demands in private consumption), with those sectors supplying energy- saving equipment and low- carbon technologies benefitting and energy- intensive sectors having to switch fuels, adopt new technologies, or increase prices. However, rebound effects may lead to unexpected negative results.
Land- use change and forestry: There are three fundamental ways in which land use or management can mitigate atmospheric CO2 increases: protection, sequestration, and substitutiona. These options show different temporal patterns; consequently, the choice of options and their potential effectiveness depend on the target time frame as well as on site productivity and disturbance history. The SAR estimated that globally these measures could reduce atmospheric C by about 83 to 131GtC by 2050 (60 to 87GtC in forests and 23 to 44GtC in agricultural soils). Studies published since then have not substantially revised these estimates. The costs of terrestrial management practices are quite low compared to alternatives, and range from 0 ('win- win' opportunities) to US$ 12/ tC. Barriers: to mitigation in land- use change and forestry include lack of funding and of human and institutional capacity to monitor and verify, social constraints such as food supply, people living off the natural forest, incentives for land clearing, population pressure, and switch to pastures because of demand for meat. In tropical countries, forestry activities are often dominated by the state forest departments with a minimal role for local communities and the private sector. In some parts of the tropical world, particularly Africa, low crop productivity and competing demands on forests for crop production and fuelwood are likely to reduce mitigation opportunities.

Opportunities: in land use and forestry, incentives and policies are required to realize the technical potential. There may be in the form of government regulations, taxes, and subsidies, or through economic incentives in the form of market payments for capturing and holding carbon as suggested in the Kyoto Protocol, depending on its implementation following decisions by CoP.

GHG mitigation policies can have a large effect on land use, especially through carbon sequestration and biofuel production. In tropical countries, large- scale adoption of mitigation activities could lead to biodiversity conservation, rural employment generation and watershed protection contributing to sustainable development. To achieve this, institutional changes to involve local communities and industry and necessary thereby leading to a reduced role for governments in managing forests.
Agriculture and waste management: Energy inputs are growing by <1% per year globally with the highest increases in non- OECD countries but they have reduced in the EITs. Several options already exist to decrease GHG emissions for investments of -US$ 50 to 150/ tC. These include increasing carbon stock by cropland management (125MtC/ yr by 2010); reducing CH4 emissions from better livestock management (> 30MtC/ yr) and rice production (7MtC/ yr); soil carbon sequestration (50- 100MtC/ yr) and reducing N2O emissions from animal wastes and application of N measures are feasible in most regions given appropriate technology transfer and incentives for farmers to change their traditional methods. Energy cropping to displace fossil fuels has good prospects if the costs can be made more competitive and the crops are produced sustainably. Improved waste management can decrease GHG emissions by 200MtCeq in 2010 and 320MtCeq in 2020 as compared to 240MtCeq emissions in 1990.

Barriers: In agriculture and waste management, these include inadequate R& D funding, lack of intellectual property rights, lack of national human and institutional capacity and information in the developing countries, farm- level adoption constraints, lack of incentives and information for growers in developed countries to adopt new husbandry techniques, (need other benefits, not just greenhouse gas reduction).

Opportunities: Expansion of credit schemes, shifts in research priorities, development of institutional linkages across countries, trading in soil carbon, and integration of food, fibre, and energy products are ways by which the barriers may be overcome. Measures should be linked with moves towards sustainable production methods.

Energy cropping provides benefits of land use diversification where suitable land is currently under utilized for food and fibre production and water is readily available.

Energy: forest and land management can provide a variety of solid, liquid, or gaseous fuels that are renewable and that can substitute for fossil fuels.

Materials: products from forest and other biological materials are used for construction, packaging, papers, and many other uses and are often less energy- intensive than are alternative materials that provide the same service.

Agriculture/ land use: commitment of large areas to carbon sequestration or carbon management may compliment or conflict with other demands for land, such as agriculture. GHG mitigation will have an impact on agriculture through increased demand for biofuel production in many regions. Increasing competition for arable land may increase prices of food and other agricultural products.
Waste management: Utilization of methane from landfills and from coal beds. The use of landfill gas for heat and electric power is also growing. In several industrial countries and especially in Europe and Japan, waste- to- energy facilities have become more efficient with lower air pollution emissions, paper and fibre recycling, or by utilizing waste paper as a biofuel in waste to energy facilities. Barriers: Little is being done to manage landfill gas or to reduce waste in rapidly growing markets in much of the developing world.

Opportunities: countries like the US and Germany have specific policies to either reduce methane producing waste, and/ or requirements to utulize methane from landfills as an energy source. Costs of recovery are negative for half of landfill methane.

Energy sector: In the energy sector, options are available both to increase conversion efficiency and to increase the use of primary energy with less GHGs per unit of energy produced, by sequestering carbon, and reducing GHG leakages. Win-win options such as coal bed methane recovery and improved energy efficiency in coal and gas fired power generation as well as co- production of heat and electricity can help to reduce emissions. With economic development continuing, efficiency increases alone will be insufficient to control GHG emissions from the energy sector. Options to decrease emissions per unit energy produced include new renewable forms of energy, which are showing strong growth but still account for less than 1% of energy produced worldwide. Technologies for CO2 capture and disposal to achieve "clean fossil" energy have been proposed and could contribute significantly at costs competitive with renewable energy although considerable research is still needed on the feasibility and possible environmental impacts of such methods to determine their application and usage. Nuclear power and, in some areas, larger scale hydropower could make a substantially increased contribution but face problems of costs and acceptability. Emerging fuel cells are expected to open opportunities for increasing the average energy conversion efficiency in the decades to come. Barriers: key barriers are human and institutional capacity, imperfect capital markets that discourage investment in small decentralized systems, more uncertain rates of return on investment, high trade tariffs, lack of information, and lack of intellectual property rights for mitigation technologies. For renewable energy, high first costs, lack of access to capital, and subsidies for fossil fuels and key barriers.

Opportunities for developing countries include promotion of leapfrogs in energy supply and demand technology, facilitating technology transfer through creating an enabling environment, capacity building, and appropriate mechanisms for transfer of clean and efficient energy technologies. Full cost pricing and information systems provide opportunities in developed countries. Ancillary benefits associated with improved technology, and with reduced production and use of fossil fuels, can be substantial.
Coal: Coal production, use, and employment are likely to fall as a result of greenhouse gas mitigation policies, compared with projections of energy supply without additional climate policies. However, the costs of adjustment will be much lower if policies for new coal production also encourage clean coal technology.

Oil: Global mitigation policies are likely to lead to reductions in oil production and trade, with energy exporters likely to face reductions in real incomes as compared to a situation without such policies. The effect on the global oil price of achieving the Kyoto targets, however, may be less severe than many of the models predict, because of the options to include non- CO2 gases and the flexible mechanisms in achieving the target, which are often not included in the models.

Gas: Over the next 20 years mitigation may influence the use of natural gas may positively or negatively, depending on regional and local conditions. In the Annex I countries any switch that takes place from coal or oil would be towards natural gas and renewable sources for power generation. In the case of the non-Annex 1 countries, the potential for switching to natural gas is much higher, however energy security and the availability of domestic resources are considerations, particularly for countries such as China and India with large coal reserves.

Renewables: Renewable sources are very diverse and the mitigation impact would depend on technological development. It would vary from region to region depending on resource endowment. However, mitigation is very likely to lead to larger markets for the renewables industry. In that situation, R& D for cost reduction and enhanced performance and increased flow of funds to renewables could increase their application leading to cost reduction.

Nuclear: There is substantial technical potential for nuclear power development to reduce greenhouse gas emissions; whether this is realized will depend on relative costs, political factors, and public acceptance.

Halocarbons: Emissions of HFCs are growing as HFCs are being used to replace some of the ozone- depleting substances being phased out. Compared to SRES projections for HFCs in 2010, it is estimated that emissions could be lower by as much as 100MtCeq at costs below US$ 200/tCeq. About half of the estimated reduction is an artifact caused by the SRES baseline values being higher than the study baseline for this report. The remainder could be accomplished by reducing emissions through containment, recovering and recycling refrigerants, and through use of alternative fluids and technologies.

Barriers: uncertainty with respect to the future of HFC policy in relation to global warming and ozone depletion.

Opportunities: capturing new technological developments
Geo-engineering: Regarding mitigation opportunities in marine ecosystems and geo-engineeringb, human understanding of biophysical systems, as well as many ethical, legal, and equity assessments are still rudimentary. Barriers: In geo- engineering, the risks for unanticipated consequences are large and it may not even be possible to engineer the regional distribution of temperature and precipitation.

Opportunities: Some basic inquiry appears appropriate.

Sector not yet in existence: not applicable.
a 'Protection' refers to active measures that maintain and preserve existing C reserves, including those in vegetation, soil organic matter, and products exported from the ecosystem (e. g., preventing the conversion of tropical forests for agricultural purposes and avoiding drainage of wetlands). 'Sequestration' refers to measures, deliberately undertaken, that increase C stocks above those already present (e. g., afforestation, revised forest management, enhanced C storage in wood products, and altered cropping systems, including more forage crops, reduced tillage). "Substitution" refers to practices that substitute renewable biological products for fossil fuels or energy- intensive products, thereby avoiding the emission of CO2 from combustion of fossil fuels.
b Geo-engineering involves efforts to stabilize the climate system by directly managing the energy balance of the earth, thereby overcoming the enhanced greenhouse effect.

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